Owing to the hard disk crisis, supply has taken a hit and prices have increased, leading to a dip in the assembled PC market.

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Friday, June 29, 2012:
NEW DELHI, INDIA: LG Electronics retained the top slot in monitor sales this year with 23.3 per cent market share. It is aiming 31 per cent for 2012. This, when the economic conditions are not favourable and the monitor industry is expected to be stagnant this year. Owing to the dollar fluctuation in recent times, LG may also hike prices by next month.

EFYTimes spoke to Sanjoy Bhattacharya, IT head, LG India to know more about the current market conditions, LG's changing channel strategy and efforts to retain the number one position in the monitor market.

Will the price hike be applicable across the vertical?

SB: Almost all our products are imported. Seventy per cent components of monitors are imported. Laptops and optical drives are 100 per cent imported. There are chances that the price hike will be applicable immediately for laptops and optical drives. Since 30 per cent components for monitors are manufactured in India and only the panel is imported from China, we may defer the price hike for some time.

According to the industry, the monitor market is going to be stagnant this year. How is the industry performing?

SB: After the Thailand floods, earthquake and other natural calamities, there is an ongoing hard disk crisis owing to which the hard disk supply and prices have gone up for the assembled PC market. The assembled PC segment has taken a dip, which can be anywhere between 30-35 per cent over last year. Till this phase continues, the assembled PC segment will not increase. Until the supply and price gets restored, the market will not recover.

Already, six months of the year are over, and so the loss incurred in these months cannot be recovered in the remaining six months. This year, we expect the industry to decrease by 20 per cent in the assembled monitor segment or assembled PC segment. Next year, when the hard disk supply and prices will be stable, we expect a 30 per cent growth.

Can you tell us about LG's channel strategy?

SB: This year, we are fundamentally changing our channel strategy in a big way. We are consolidating the number of our regional distributors. We had around 200 regional distributors across India and are now bringing the number down to 80. As the market is not growing right now, we want to give bigger business to the existing people rather than doing smaller business with many people.

Under regional distributors, we will get in 1,400 sub-distributors across India and under them we will create 14,000 authorised system assemblers. Appointment of sub-distributors will be a new tier for us. We will authorise them for reselling. As of now, only the distributors are authorised for reselling. Distributors will supply to the sub-distributors who will further sell the product to the authorised system assembler. That is a three tier plan we are doing. Our earlier channel was never recognised properly. Now, we will follow a systematic approach.

Are you suggesting that you are appointing all new sub-distributors and authorised system assemblers?

SB: We already had sub-distributors. We are reframing them in different environments and in many new identities. In case of system assemblers, it is a huge task to manage 14,000 people. We are also creating our website lgchannels.in to manage the performance and incentives of 14,000 people.

How has the response been to the portal for your channel partners lgchannels.in and how has it been beneficial to LG?

SB: We started this portal in March. We have over 5,000 registrations as of now. We are in the process of selecting 1,400 people out of these 5,000, who will be the potential sub-distributors. The others will work as system assemblers.

Once we announce the program, we expect many more to log in to the system. With the help of this website, the sub-dealers will come to know about LG's program and contact point, and any escalation or other similar issues.

Every quarter, you come out with channel engagement programs. What are the kind of schemes that you have for dealers?

SB: In March, we had a very successful program called 'Buy LG Feel Lucky', in which, every day, across India, over 100 gifts (valued between Rs 1,000 and Rs 8,000) were given out to partners. Dealers had to buy minimum two units to register their purchase and every day, we used to take out a lottery. That particular scheme received a very good response.

In April, we did a program called 'Naya Vikas Patra' for customers and dealers. Once anyone bought nine monitors from our distributor, and immediately he or she was given a gift.

In May, we came out with one of our biggest consumer programs. The scheme will go on till September end at least. With every LG monitor, we are giving a full version of the McAfee anti-virus (valid for one year) to consumers.

Are there any other schemes that you are planning to start for customers or channel partners soon?

SB: Yes. We are planning to come out with incentives for the 14,000 system assemblers. So far, we don't have any specific program, but we will come out with a very unique proposition that will be announced by July 1.

LG currently has a 23.3 per cent market share and is aiming at 31 per cent in 2012. How are you planning to achieve this growth?

SB: In the last quarter, we had withdrawn from the 39.6-cm (15.6-inch) LCD monitor category. This particular category forms around 33 per cent of the industry. In June, we relaunched the product. After its relaunch we will definitely gain some market share in that particular segment.

So, one is the new product introduction, the second is the new distribution structure and the third is the consumer offer like the one-year version of Mcafee, on which we have received a very good response so far. These three steps will help us gain market share.

What was the reason for withdrawing from this category?

SB: Initially, we thought the Indian market will be moving toward 50.8-cm (20-inch) and 53.34-cm (21-inch) and we discontinued the product, but it was a wrong prediction. Last year, the market was headed toward high-end, but then, the hard disk episode happened. Now, there is a high pressure on the assembled PC price. We have seen a huge demand for the low-end monitor and that is why we decided to relaunch the product.